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Legislators debate the merits of tax credits for education expenditures

Tax credits was the unifying theme that tied together each of the five bills heard by the House Education Innovation Policy Committee on Tuesday.

More specifically, a group of legislators offered proposals to create and expand tax credits for education-related expenditures that are aimed at improving K-12 outcomes for students.

Here’s a rundown of each of the bills discussed by committee members Tuesday.

Incentivizing teachers to obtain master’s degree in content area

Teachers often get master’s degree outside their specialized content area. That’s a problem, according to Rep. Dean Urdahl (R-Grove City).

The former teacher said studies have proven that the more experienced a teacher is in their teaching content area, the better the outcome their students will have in learning the material.

Urdahl hopes to fix that problem by providing financial incentive for teachers to pursue their master’s degree in the content area in which they teach. He sponsors HF245, which would allow licensed K-12 teachers who complete a master’s degree program in their field of licensure to qualify for a refundable individual income tax credit of $2,500. The bill, which has no Senate companion, was laid over for future consideration by the committee.

Teachers whose individual tax liability is greater than the amount of the credit would be able to receive the amount in excess as a refund.

Urdahl said that only two out of five K-12 teachers in America who have a master’s degrees have obtained it in their specialized content field. But he said he believes the tax credit will incentivize more to pursue such avenues. The average cost of a master’s degree in such fields is about $15,000, he said.

Urdahl’s inspiration came from a recent visit to Finland to study the country’s internationally recognized public school teaching model. He said all of teachers in the Scandinavian nation must have a master’s degree in the subject area in which they teach.

“I think (this bill) hits the sweet spot because it is working with people who have presumably demonstrated their ability to work well with kids and now want to deepen their content knowledge,” said Rep. Jim Davnie (DFL-Mpls). He urged colleges and universities to offer more flexible schedules for teachers to pursue master’s degrees in specialized content areas like biology, history or mathematics.

Among the bill’s supporters is Dr. David Jolly, president for the Science Museum of Minnesota, who serves on several national and local education-based advisory boards and councils. Students receive the most benefit from teachers with master’s degrees in their content field, he said.

“Right now those teachers are less available to minority and low-income students in this state as they are in the nation,” Jolly said. “Teacher retention is increased when teachers have disciplinary degree earnings by a factor of nearly twofold.”

Tax credit for nonpublic school education? Or voucher?

Members debated semantics over a provision of a bill that would extend the K-12 education credit for families to nonpublic school tuition.

The word “voucher” was bandied about by DFL members, but the bill’s sponsor, Rep. Jim Knoblach (R-St. Cloud), said his proposal contained no such language, in technicality or spirit.

“We have had a private school tax deduction for people in this state since 1955,” Knoblach said. “It’s not a new concept … and only in the best of cases are we talking about this credit covering a small minority of the cost to attend private school.”

Knoblach said the bill provides important financial help for public and private school families alike.

“The deduction and credit right now covers things like books, school supplies, music instruments and after school tutoring — things children need,” he said. “The credit, in particular, is useful for lower income families in providing more opportunity.”

The bill, which has no Senate companion, was passed on a split voice vote and referred to the House Education Finance Committee.

Additionally, the bill would increase the maximum credit for public and nonpublic school tuition from $1,000 to $1,500 per child. The bill also aims to accomplish the following:

  • increase the maximum K-12 education deduction from $1,625 to $2,500 for each child in grades K-6, and from $2,500 to $3,750 for each child in grades 7-12, and adjust the maximum deduction amount annually for inflation beginning in tax year 2016;
  • increase the K-12 education maximum credit from $1,000 to $1,500 per child;
  • increase the income at which the credit begins to phase out from $33,500 to $47,500, and decrease the rate of the phase out; and
  • adjust the maximum credit and the income level at which the credit begins to phase out annually for inflation, beginning in tax year 2016.

Expanding deductions for pre-k learning programs

The committee approved HF72, sponsored by Rep. Sarah Anderson (R-Plymouth), which would extend the education expense deduction and the education tax credit in Minnesota’s individual income tax to prekindergarten educational programs. Current law limits the deduction and credit to education-related expenses for children in grades K-12.

The bill was referred to the House Education Finance Committee.

Its companion, SF304, is sponsored by Sen. Carla Nelson (R-Rochester) and is awaiting action by the Senate Taxes Committee.

Higher ceiling for credit, more families eligible

A second Anderson-sponsored bill also received committee approval and was sent to the House Education Finance Committee.

HF667 would increase the maximum K-12 education expense credit from $1,000 to $1,500 per child, increase the income at which the credit begins to phase out from $33,500 to $50,000 and decrease the rate of the phaseout.

The bill, which has no Senate companion, would adjust the income level at which the credit begins to phase out annually for inflation, beginning in tax year 2016.

Increased ceiling for reading tutor vouchers

Members of a coalition of families and educators that support more help for students with reading disorders testified in support of a bill to extend by five years a refundable tax credit for families that spend money on out-of-school reading tutoring.

HF359, sponsored by Rep. Linda Runbeck (R-Circle Pines), would also increase the maximum credit from $2,000 to $3,000.

A 2014 law that created the tax credit included language that allowed the tax credit for one year only. The credit, which is not subject to an income-based phaseout, would also be extended to include the cost of evaluations needed to diagnose a reading disorder.

Approved by the committee, it, too, was sent to the House Education Finance Committee. A companion, SF271, sponsored by Sen. Roger Chamberlain (R-Lino Lakes), awaits action by the Senate Education Committee.

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